Apple Watch Gold Edition 2014

The Reason Why a $10.000 Apple Watch Makes Sense

The pricing of Apple Watch was probably a bigger argument of the watch itself. Torn between whether to consider it a fashion statement or a high-tech smartwatch, the curious minds finally got their answer.

Apples and Oranges

A $10.000 smartwatch doesn’t make in a lot of ways. You can’t compare them to Patek Philippe or Rolex, because these brands represent a sentimental value that’s passed through generations. A smartwatch you’re supposed to charge overnight that will go obsolete in 12 months (at least technically) won’t do any good in terms of the perceived value. Anything with a CPU inside is doomed to die sooner or later no matter how much gold you use in the candy wrap.

But there is one reason I can deem acceptable the huge price range Apple Watch is offering.

People buy things in consideration of their relative cost vs benefit. If anyone comes out with a time machine tomorrow with a £1 billion price tag, no one is going to question if it’s worth it, because there is nothing to compare its cost/benefits. When you are buying a TV, you try to find the best value between cost, screen size or any other smart things TVs do nowadays. Take a look at how Economist maximise their profit by offering relative subscription pricing.

This practice is called price anchoring, and just as it helps you find the best deal, it also helps brands to maximise their profit.

Apple wouldn’t want you to buy the base model ($349), and you know you can’t afford a 10 grand watch. But the size of the price range makes a $1.000 Apple Watch seem acceptable. It gives the impression that you’re spending an OK amount of money on a watch without going out of town. The middle option will make sense to many people who are planning to maximise their utility from a smartwatch while not sacrificing style.